EnWave Remains Strong Cash Flow Positive

EnWave Corporation (TSXV:ENW – $1.29 CAD & OTC:NWVCF – $0.99 USD & Frankfurt:E4U – €0.81) offers industrial-scale dehydration technology for commercial applications in the food, cannabis, and pharmaceutical spaces. The Company’s Radiant Energy Vacuum (“REV™”) platforms are becoming the new global dehydration standard, as they are faster and cheaper than freeze drying, and have better end product quality than both air drying and spray drying.

The Company’s most important achievement during the second quarter, which ended March 31 2018, was the acquisition of the 49% non-controlling interest in NutraDried LLP (NutraDried), bringing the Company’s ownership to 100%. On the basis of annualized fiscal 2018 net income, the Company paid a purchase multiple of only 2.1x net income to acquire the 49% non-controlling interest. A very attractive deal indeed!

NutraDried, which manufactures and distributes Moon Cheese, generated sales of $2.36 million in the second quarter, ended March 31, 2018 compared with $1.40 million in the second quarter of 2017. An increase of almost 70%. These were the highest ever single quarter sales for Moon Cheese. The strong rise was partly due to several substantial orders from Costco’s Midwest, Northwest and Southeast divisions for club format Moon Cheese. NutraDried furthermore reported $716,000 in net income for fiscal year 2017, and $1,086,000 for the first half of 2018.

With solid profit margins and additional revenue opportunities, NutraDried is well positioned for growth, which in turn further solidifies the business case for the use of EnWave’s technology to produce high quality, nutritious snacks.

EnWave continued to be cash flow positive with cash flow from operations of $319,000 for the first two quarters of 2018, compared to a negative cash flow of $46,000 for the first two quarters of 2017.

The rapid progression of EnWave’s relationship with Tilray is significant as the cannabis sector is still within the early phases of legalization in many parts of the world. Therefore, the growth implications are very attractive in this market vertical.

Tilray has chosen to partner with EnWave and utilize REV-processing because it contributes to a more efficient production scenario. The stature of Tilray as a respected participant in the international cannabis market increases the likelihood of attracting additional licensed partners to use REV technology.

EnWave’s management remains very bullish on the entire cannabis sector and continues to work towards securing additional agreements in Canada and international markets.

We reiterate our buy recommendation for EnWave Corp. with a price target of $3.46, which is 168% above today’s stock price.

Download the second quarter 2018 EnWave Corp. Company Report.

For important disclosures, please read our disclaimer.Latest Company Report (pdf)

  • There was an interesting post elsewhere about the introduction new US Army rations called CCARs (Close Combat Assault Rations).
    The article describes the technology used with developing the rations and what benefits they bring to the table. The technology, “vacuum microwave drying”, can only imply Enwave.
    Target dates for field testing (2020) and full service deployment (2023) are given.


    • John Peters (editor)

      Hi Buhlz_I,

      It sure was an interesting event. We’ll have an update on it on Saturday.



  • Buhlz_I,

    That’s an interesting and informative update. It’s too bad that there is a lengthy period before the CCARs would have an impact on ENW’s bottom line. However, it is positive forward progress nonetheless!

  • All well & good, but it doesn’t justify the already lofty market cap [130mil] let alone the target price [$3.46] of about 346million. I think the pot affiliation has helped the share price tremendously but I don’t think in the end there royalty model will be accepted. There will not be enough money in the industry to warrant a 3.5% royalty. As the realization that pot price expectations are too high the producers will have to work on cutting costs not adding to them.

    • John Peters (editor)

      Hi Joe,

      Thanks for your feedback. The royalty is obviously an added cost, however it’s important to remember that by using REV to dry the cannabis, producers will actually save lots of money as otherwise it has to dried with pasteurization.

      In addition, the REV drying process also eliminates the need for large-scale in-house drying rooms and their associated potential for product loss due to mold growth during the traditional multi-day drying process.



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